Digital Villages- Pasha Centres

Executive SummaryThe achievement of an information-based society is one of the main priorities of the Government towards the realization of national development goals and objectives for wealth and employment creation.

The Monitoring and Evaluation (M&E) report provides an insight into how the Pasha Centres are operating. This M&E has been carried out with the baseline that all the program design requirements have been met and all partnerships between KICTB and service providers are in place as this provides the minimum infrastructure required by the Pasha Centre.

These minimum program design requirements include:

Branding: Standard image and colours to ensure visibility Funding: Receipt of funding from banking agent. Equipment: Computers, routers, furniture and all other equipment

has been purchased and installed. Training and technical support: Management skills and support for

equipment Bouquet of services: Business and money transfer licenses

Background informationRole of Pasha Centers

To provide Kenyans in rural areas with access to information; the increased access to information will serve to:

1. To enhance business skills and knowledge in rural areas as well as expose rural communities to world news and trends that may positively enhance their lives;

2. Provide employment for Kenyans both directly through economic activity that the centre will generate and secondarily through the opportunities that the information will provide;

3. To bring online services closer to rural communities.

What is a Pasha Center?

Pasha centers provide a suite of services to the public via computers connected to the internet. Pasha Centers are generally modeled under three (3) categories: Basic, Standard, and Advanced.

Who runs and owns the Pasha e-centers?

The Pasha Centers are run by private entrepreneurs. Prospective entrepreneurs who apply for the Digital Villages Revolving Fund and are successful will be eligible to set up Pasha Centers.

Digital Villages Revolving Fund

How the revolving fund will be administered;

Steps-

1. A call for application shall be made by Kenya ICT Board for prospective entrepreneurs to submit Digital Village Revolving Fund loan applications;

2. Prospective entrepreneurs submit online;

3. Submitted applications are vetted by Family Bank and Kenya ICT Board’s Grants Committee;

4. Successful entrepreneurs are informed and invited to sign a loan agreement and Kenya ICT Board service level agreement;

5. Successful entrepreneurs begin loan repayment after a grace period of three (3) months.

The funds allocated to each entrepreneur will be repayable over a three (3) year period. These repayable funds received by the entrepreneurs can be used to finance set-up costs and or upgrading of an existing facility.

Pasha Group One

A call for proposals was done on January 24th 2011. On the application deadline of February 25th 2011 a total of 689 applications were received, with over 800 enquiries. Of the 689 applicants, 37 emerged as successful.

A total of 47, 889, 147 was approved for disbursement.

Pasha Group Two

The second call for applications was done in November 3rd 2011 and closed in December 3rd 2011. A total of four hundred and fifty six (456) submitted a complete pasha on-line application, of which a total of 26 emerged as successful.

A total of KES 27,955,000 has been approved for disbursement.

A total of KES 75,844,647.00 has been approved for disbursement for phase 1 & 2. A total of KES 53,762,739.00 has been disbursed to date- March 31 2013.

Approved list for round one and two- appendix-1.

Key findings

The program design envisaged to have all the minimum requirements as listed above to enable the Pasha Centres to operate in optimally. This required formalisation of strategic partnerships between KICTB and selected service providers. During our review, we have classified the Pasha Centres into 3 categories i.e. those that have the minimum infrastructure as designed, those that have aspects of the minimum infrastructure in place and those without any of the minimum requirements in place.

Class Number

Pasha Centre’s with all minimum requirements in place

None

Pasha Centre’s with aspects of the minimum infrastructure in place

59

Pasha Centre’s without any of the minimum requirements in place

4

From the tabulation above, it is important to note that none of the current Pasha Centres have the full complement of the minimum requirement, while 93% are operating with some aspects of the minimum requirements which mainly include funding, equipment and bouquet of services while a few have attended self-sponsored management and technical training. The remaining Pasha Centres have not received any funding and as such were unable to pursue the achievement of the remaining requirements.

Despite the numerous challenges most Pasha Centres are experiencing all Centres, expect 3 that have closed down, continue to run their enterprises despite the intense competition and challenging financial situations. The entrepreneurs have shown admirable resilience and commitment to the DVP.

Monitoring and Evaluation Results

The M&E results show that there are currently 63 Pasha Centres that have been approved to receive their approved loan amount.

So far:

53- have requested and received all or some of their approved loan amount;

10- have not yet draw down any disbursement.

However there are 3 Pasha Centres that are no longer operational with reasons including repossession of equipment by the financial institution

(Family Bank) and shut down due to lack of business and faulty equipment.

An analysis of the Digital Villages Revolving Fund (DVRF) shows that the portfolio at risk currently stands at more than 50%.

A research of similar projects especially in developing countries provides a comparative analysis for the DVP. This research and world lessons reviews what has been done to bridge the digital divide in these countries. Project such as the Rural Communications Development Fund in Uganda, the Multi-Purpose Communication Centres in South Africa, the eCARE project in Ghana and the numerous rural ICT projects in India have been implemented. It also analyses the constraints and challenges encountered by the project sponsors and proponents and links the challenges and lessons learnt to develop critical success factors for sustainability of rural ICT projects. These include establishing strategic partnerships, tolerance to failure, capacity building and enabling local content development among others.

A summary of the findings and insights of the results is presented below:

Theme HighlightsRecord Keeping Financial records for most Pasha Centre’s

are very rudimentary and incapable of pro-viding appropriate information of perfor-mance review.

Business diversification Majority of the Pasha I and Pashas II are un-able to generate enough revenue to pay the loan.

However records show that these some Pashas are repaying their loans on time.

Empowerment and Training

There is a general lack of business skills from the Pasha Managers, especially those who are in business for the first time.

Some Pasha owners/managers are unable to tell whether their businesses are making a profit or loss.

Pasha owners/managers spend a significant amount of money looking for technical sup-port where the equipment and accessories are not functioning.

Competition The Pasha Centre’s do not have a competi-tive advantage over their competitors.

The competition can afford higher bandwidth internet and offer a larger variety of services e.g. commodities.

Ownership Because of challenges in operating prof-

itably, some Pasha Owners have decided to abandon and close their centre’s.

Start-ups vs. Existing businesses

Analysis shows that start-ups that have re-ceived the DVRF facility find it more difficult to conduct business.

Existing business utilize already existing channels to market and sell the Pasha prod-ucts while start-ups have to do significant marketing drives.

Branding and creating awareness

It is not possible to tell Pasha Centre’s apart from their competition

Pasha Centre’s are faced with significant branding challenges, that is differentiation of their centre’s from other similar businesses in their areas.

Conclusion

We present action plans that must be undertaken in the short term and reinforced in the long term to improve success and sustainability of the DVP. One key action plan is the formalisation strategic partnership with service providers e.g. banks, government ministries, telecommunication companies. We also recommend the development of a revenue model that will assist in developing key performance indicators for each Pasha model and will act as a guide to approving loan applications. We also recommend development of a capacity building framework and the review of the loan design to develop a knowledge economy and improve DVRF performance.

Introduction

The Digital Villages Program (DVP) is a programme of the Government of Kenya’s Ministry of Information and Communication (MoIC). The programme is supported by the KICTB (KICTB) to address the digital divide that has seen Kenya’s ICT sector more active in the urban areas, resulting in wide regional disparities in the diffusion of ICT services. Through the DVP, 63 Pasha Centres have received funding from the Digital Villages Revolving Fund (DVRF) to start or expand the supply of IT goods and service. The Pasha model is run through a distributive strategy that ensures that at least 1 Pasha Center is set up in each of the 210 Constituencies.

A monitoring and evaluation (M&E) framework has been developed to assess the performance of the DVP against established goals and objectives. Phase I of the M&E work was completed in September 2012 and Phase II was started in November 2012. This is the Phase II Quarter 1 M&E report for the period November 2012 – February 2013 which reviews the operational outputs and processes of the DVP as well the developmental impact of Pashas towards IT inclusion, access to ICT resources and broader socio-economic impacts.

The Pasha model is an effort to democratize access to ICT resources invested towards Kenya’s economic, political and social progress as embraced by the Kenya Vision 2030. This is the broad development strategy that anchors Kenya’s development agenda. In this agenda, ICT is embedded as a driver for economic and social progress.

The developmental role of ICTs is founded on their beneficial effects such as facilitating economic transactions, access to public (government) information and services and enhanced service delivery. Pashas provide a range of services that transfer these benefits to a wide cross section of citizens, and therefore, they have emerged as significant service delivery centres and their services have practical value in the daily lives of citizens.

It is also evident that Pashas are cascading and leveraging gains made in the national ICT strategy and the bold investments made in the sector. These gains are further addressed in the results section of this report and include, raised financial inclusion, increased demand for bandwidth access, enabling of service delivery across sectors –health, education and governance, enterprise creation through the Pasha Loan scheme, critical-mass effects created by reach of IT resources and increased IT literacy.

Description of Monitoring and Evaluation Methodology

Deloitte’s monitoring and evaluation methodology ensures that the performance of the project is reviewed on a real-time basis to provide constant information to the project leadership. The established goals of the project are assessed throughout the period leading to a quarterly report to identify trends and insights into the project.

Approach

Our approach is developed from tried and tested techniques, global best practices in monitoring and evaluation and lessons learnt during Phase I of this assignment.

The assessments have been conducted through:

1. Site visits and walkthroughs with Pasha Owners and managers.2. Face to face discussions with Pasha Owners, staff and customers.3. Document review at client site.4. Assessment tools.

Methodology

The methodology employed in conducting this quarterly M&E assessment involves assessing whether the project is meeting its goals. The M&E program is expected to determine and inform the project leadership at KICTB on whether:

1. Goals and objectives are being achieved.2. DVP operational guidelines are being met.3. Impact of the project to the community.4. Emerging issues, insights and recommendations arising from the

assessment.

Monitoring Results and Evaluation

Overview of Project

In order to address the huge disparity in the diffusion of ICT services between urban and rural areas, the KICTB has supported the roll out of Pasha Centres. A universal access fund, the Digital Villages Revolving Fund (DVRF) was established to advance loans to entrepreneurs to enable them to establish the Pasha Centres. The loans are repayable within 3 years through the program’s funding agent, Family Bank Limited.

To access the funding, entrepreneurs respond to a Call for Proposals issued by the KICTB. Family Bank in conjunction with KICTB analyses vets and appraises the applications before selecting the best proposals for approval of funding.

There have been 2 Calls for Proposals, with the round 1 issued in January 2011 and the round 2 issued in November 2011. More than 1000 proposals have been submitted and appraised, with 39 round 1 and 27 round 2 applications being approved and funded.

DVP Project Status

A total of 63 projects have received funding to date with a total loan volume of Kshs 75,844,647/- being disbursed as summarized below:

Table 1: DVRF loan applications and approvals summary

Call for proposals

No of applicants

Qualified applications

Total approved loan

Round 1 731 37 47,889,147

Round 2 456 26 27,955,500

Total 1, 187 63 75,844,647

Scope of this report

The M&E plan involved visiting a total of 38 Pasha Centres, which included all the 26 Round 2 and 12 in Round 1.

DVRF Portfolio and Performance Analysis

Portfolio status

The portfolio status is indicated below;

Table 2: Loan data

Amounts disbursed 53,378,150

Amounts affected by arrears

35,555,510

Portfolio Performance

An evaluation of the performance of the portfolio is as follows;

a) Loan output: There have been 2 calls for proposals which have generated over 1,000 applications. The loan portfolio consists of 63 beneficiaries with a combined loan portfolio of Kshs 75,844,647/- out of which Kshs 53,378,150/- had been disbursed by 31 December 2012.

b) Loan arrears: The portfolio at risk stands at more than 50% indi-cating that a high percentage of borrowers are not repaying. Analy-sis of business information reveals that most Pashas operate at breakeven and low profitability, and their loan capacity (ability to pay) is weak.

c) Loan loss: 3 Pashas were not operational:

d) Risk profile: The Pasha risk profile is based on a 3 tier classification i.e. doubtful, substandard, loss. This risk segment has increased over time and the amounts in arrears have increased over time from Kshs 44,350/- in June 2011 to Kshs 6,986,779/- in December 2012. 6 loans are doubtful and 8 are substandard and hence, if these loans are not serviced, the loan loss is likely to increase. The recovered amount has increased to Kshs 10,204,000/- as at 31 December 2012.

e) Loan administration: Loan access is based on various conditionali-ties including securing of premises, equity contribution and super-vised procurement (the bank pays IT vendors directly, based on sub-mitted invoices).The procurement aspect is problematic and a lot of time is lost piecing together various vendor invoices at various stages of the loan cycle. The current loan administration processes are ineffective and have contributed to delays in disbursements to the entrepreneurs. These inefficiencies have a snowball effect on Pasha Centres since delayed disbursements contribute to delayed repayments thereby increasing the portfolio at risk.

Factors affecting debt servicing

A number of factors are contributing to the increasing risk profile. These factors have been group into financial/economic and non-financial/non-economic factors as follows:

a) Financial/Economic factors

Majority of the Pashas are unable to generate adequate revenues to repay the loan. Most are only meeting the costs of operations. This

is due to undiversified portfolio of services and high costs of operations which limit the financial capacity of the Pasha. The 16 Pashas listed in the Portfolio at Risk all face liquidity problems.

The challenges in generating adequate revenues to meet operating costs and repay the loan can be traced back to the reasonableness of projections that advised the loan size in the first place.

b) Non-financial/Non-economic factors

Many of the Pashas are operation in markets where there are other players offering the same services. More often than not, these competitors tend to have superior equipment and can afford higher bandwidth for internet access.

Management capacity and awareness are also factors that limit the capacity of the Pashas to service the debts. Management lacks the necessary business skills to run a profitable enterprise and in many cases have not created awareness for the products and services within the markets they serve.

Portfolio business profile

Based on the DVRF operational guidelines, Pashas Centres provide a standard package of services that includes:

Internet browsing Retail of stationeries and consumables Training Promoting ICT spaces for community leisure/recreation such as in-

stalled TVs, gaming Office bureau services such as photocopy, printing, and document

formatting.An analysis of the Pasha Centres, what is working, what is not working and possible interventions is provided in Table 3 below:

Business characteristics

Profile What is working What is NOT working Proposed interventions

Pasha model (based on procurement)

Most Pashas conform to the standard model consisting of an average of 10 – 20 computers.

The Pashas are able to provide a bouquet of services at the same time i.e. internet services and training

85% of the approved loan goes into purchase of equipment leaving the entrepreneur with very little working capital to operate the centre.

Review proportion of loan for equipment purchase against working capital requirements in order to ensure that Pasha Centre is capable of operating on a day-to-day basis

Management model 90% of Pashas are owner managed

Most managers have entrepreneurial nous and understand how a business should be run.

The entrepreneurial knowledge needs to be supplemented with business skills which are generally lacking.

Structured and regular training for all Pasha owners/managers such as finance for non-finance managers and entrepreneurship need to be introduced

Services offered All Pashas offer at least 3 services/products as provided in the operational guidelines. Some concentrate on office bureau services while others concentrate on training.

The services offered are meeting the needs of the local communities in providing access to ICT services such as data (internet) and e-government services such as HELB loan applications, NHIF and NSSF services, KRA PIN numbers etc.

The designation of the Pasha Centre as a conduit for diffusion of government services has not been exploited fully. The competition is offering the same services as the Pasha Centre.

Leverage on the county government to prop Pasha Centres as the preferred hubs for access to e-government services e.g. business registration and licensing, tax registration and others.

Record keeping/accounting

Most Pashas keep rudimentary records despite the M&E team sharing a comprehensive financial management template.

The entrepreneurs appreciate the need to maintain some form of records to show sales and expenses. They also appreciate the importance of monitoring

The financial records maintained are inadequate to analyse a trend and therefore make strategic decisions on the future of the enterprise. The training so far

Structured and regular training for all Pasha owners/managers such as finance for non-finance managers and entrepreneurship need to be introduced

Business characteristics

Profile What is working What is NOT working Proposed interventions

performance of the business.

provided has not benefited the entrepreneurs as intended.

Sustainability Majority of the Pashas are struggling to meet operating costs leading to many failing to repay the loans.

The Pashas have been trying to introduce new products and services from the bouquet provided such as money transfer, training and computer accessories. Other Pashas have increased their marketing efforts and conducted analyses to determine the requirements of their local communities

The lack of business skills to run viable enterprises is a key limiting factor for many Pashas. Competition is also offering the same products and services using superior equipment and as such customers are more likely to go to the competition. Pashas Centre’s have no competitive advantage.

Other than developing a revenue model as proposed above, there is an urgent need to identify strategic partnerships that would give Pashas a competitive advantage to ensure sustainability e.g. government services such as education and health in partnership with the private sector.

Table 3: Portfolio evaluation

Portfolio and Performance EvaluationThe DVP value chain consists of policy environment and a series of transformations that create the outcomes and impacts enjoyed by citizens. This value chain is described below:

Precursors Inputs Intermediate deliverables

Outputs Outcomes Impact

Strategy(Legal, institutional, political and policy commitments)

Implementation(Money, labour, technology, values, targets)

Adoption, use, scalability (Pashas as public access systems )

BenefitsNew actions and transactions, user benefits, development impacts

This section reviews how the DVP resources are employed to create value and end user befits as mapped by this value chain.

Efficiency DVP targets to establish 210 Pashas in a 3 year period, and have the DVRF revolving fund disbursed to the tune of USD 4 Million. As at 31 December 2012, there were 63 Pashas (with 3 non-operational) and a total USD 620,000/- has been disbursed. The new constitutional dispensation has brought about changes in the number constituencies and introduced a devolved government. It is necessary to review the target of establishing Against the planned milestones, the current operational efficiency is below par. The turnaround time for inputs is slow and this will also undermine eventual outcomes.EffectivenessDVP effectiveness is measured in terms of achievement of project objective including enhancing ICT access (as regards geographical reach, fairness, usefulness) and user impactEnhancing ICT access The parameters for assessing effectiveness include geographic reach and usefulness in the lives of users, and intermediate impacts.The rural reach of the Pashas is evident and most are located in rural and peri-urban areas that have limited access to service delivery. Rural areas are increasingly served by public infrastructures like telecommunications, electricity and a good road network. These infrastructures have promoted increased investments in financial services like mobile banking and ‘’branchless’ banking services that attract the unbanked because of their convenience and portability.Pashas integrate these services in their set up and hence become facilitators for the uptake of these services. Further, the presence of Pashas attract first time users to get skills in ICT and this training extends

to young school leavers to other demographic segments like police, civil servants and teachers.

Intermediate impacts Financial inclusion The Global Findex 2012 1compares rural and urban reach in terms of financial services. The report observed trends in Kenya that suggested only 35% of the rural populace in Kenya compared to 70% urban have a bank account. This means that the reach of financial services is low and there is a gap in formal financial inclusion for rural citizens. The Pashas offering mobile money and other agency banking services play a role in facilitating financial inclusion, spreading financial reach to the unbanked. The social and economic benefits of inclusion in the formal financial economy cannot get gainsaid. Cash transfers and other economic transactions have a positive effect on savings, borrowing, safety and security. Financial inclusion strategies have positive effects on poverty alleviation and therefore, Pashas are making a contribution to this end.Diffusion of ICT servicesThe National ICT Master Plan envisages to ensure that 100% of Kenya’s population can access information they require through the use of ICT in order to create a Knowledge Economy. The presence of a Pasha has an effect on ICT penetration and usage. A number of observations are illustrative of the ICT access for citizens, listing ‘’every day services’’ that have high relevance and benefit for users.

Students and first time learners use the centres for training and basic computer orientation.

Pasha clients use e-government services such as obtaining KRA pins, registration of births and access to other administrative data. Others use the internet to access government bids and special programmes like the Women and Youth Enterprise Funds.

Police officers have been trained in basic computer literacy. Community groups use the Pashas to record minutes and other

documentation Students and teachers use the Pashas for research. Parents and students us the Ministry of Education portals to get

examination results and school admissions Pashas with TVs and gaming consoles act as entertainment and

information centres. Government administration such as line ministries and provincial

administration direct people to Pashas to get e-government resources. They are also customers of pashas for office bureau services.

1 The Global Financial Inclusion (Global Findex) Database is a project funded by the Bill & Melinda Gates

Foundation to measure how people in 148 countries - including the poor, women, and rural residents - save,

borrow, make payments and manage risk.

Contribution to the National ICT StrategyThe DVP has been established against a backdrop of a formative yet well progressed ICT policy and institutional framework. Under the Kenya Vision 2030 development strategy, ICT has been embedded in the social, economic and political pillars. Various signature or flagship projects including accessing computers to schools and training the educational establishment, establishment of a business process outsourcing centre, ‘’Konza City’’ and equitable public service delivery have been commissionedThe recently launched ICT Master Plan (Connected Kenya 2017) seeks to support an ICT led knowledge economy. This Master Plan is founded on 3 key pillars which are:

Enhanced public value: Using ICT to enhance delivery and access of public services.

Development of ICT businesses: Establish ecosystem for market adoption of locally developed innovations.

ICT as a driver of industry: Enhance the productivity, global competitiveness and growth of the Vision 2030 pillars with a special emphasis on SMEs.

The contribution that Pashas have made to the national development and ICT strategy can be illustrated further by the following examples;

The DVP loan has catalysed investments in the ICT sector and provided ICT skilled entrepreneurs that build a critical mass of ICT resources. This has led to progress in the industry with innovations and ICT outreach.

Pashas provide information and access to services that have empowerment effects on communities. Access to telephones, internet, money services and communication related services adds to the ICT literacy and decreases the digital divide.

Pashas provide access to public/government information which allows the rural communities to access government service and reduce geographic marginalisation.

Pashas have trained numerous students who gain ICT skills as they wait to go for higher learning or get absorbed in the job market. The skills gained offer them a competitive edge.

Schools often seek for training in computer literacy. This training leverages the GOK investments in flagship projects such as the ‘’computer supply project’’ in which Kshs.438 million is earmarked to equip of 2 public secondary schools from each constituency with a comprehensive ICT infrastructure. A total of 420 schools throughout the country are targeted to benefit.

Bandwidth usage: Internet usage has increased nationally, and according to the CCK, the total bandwidth usage by December 2012, rose to 48.3%. Although connectivity is still low especially in rural areas, Pashas constitute a growing segment of bandwidth consumers.

Research and World Lessons

Similar projects

Many of the world’s developing nations recognized at the turn of this century that building an informed society is a key enabler to acceleration of rural development. Many countries therefore instituted programs that would bridge the digital divide between the urban and rural areas. The common denominator in all these countries is that the rural areas have remained poor with little or no access to information and communications technologies.

Countries such as Uganda, India, Ghana and South Africa commissioned projects early this century with objectives to provide their rural centres with information and communication technologies that would also assist in uplifting their livelihoods. These projects involved government funding for entrepreneurs to establish ICT hubs in rural settings.

In Uganda, the Rural Communications Development Fund (RCDF) was established to support the development of a commercially viable communications infrastructure in rural Uganda, thereby promoting social, economic and regional equity in the deployment of telephone, Internet and postal services. The RCDF was designed by the Uganda Communications Commission (UCC) to establish an appropriate level of internet presence to each subcounty. UCC decided that the provision of financial support from the RCDF to deploy a minimum level of internet point-of-presence (POP) in every district centre would be the next logical step of national ICT development.

The South Africa ICT sector is relatively well developed and privatized. However, there still exist significant disparities and inequalities between the urban and rural areas of the vast country. The government is heavily engaged to overcome the inequalities in ICT infrastructure. The government has implemented a number of projects aimed at bridging the divided including the Multi-Purpose Communications Centres (MPCCs) and Telecenters. The MPCCs serve as a base for local, provincial and national government and other service providers. They are intended to increase accessibility for local communities to government information and services, improving communication between government and citizens. The telecenters are an initiative of the Department of Communications and the Universal Service and Access Agency of South Africa (USAASA), each containing a minimum of 10 networked computers with internet and other communication tools. These are owned by entrepreneurs, NGOs, community-based

organisations (CBOs) and SMEs. The services offered include office bureau services, data (internet and email) and vocational training and certification.

In the Indian subcontinent where the digital divide has been debated and researched extensively, a number of initiatives to reduce the huge gaps that exist have been initiated. Recent experiences with experiments like Gramdoot in Rajasthan, Bhoomi in Karnataka, 2Mbp universal connectivity in Andhra Pradesh, Gyandoot in Madhya Pradesh and e-Choupal across the country suggest that ICT has been quite useful for the rural masses and has met some of their immediate interest and enhanced the quality of rural life.

In Ghana, the eCARE project provides telecommunications services in peri-urban and rural areas through commercially run ICT centres. eCARE is an acronym for e-commerce and renewable energy. Entrepreneurs are required to certify under eCARE training programme, provide equity and suitable location for placement of eCARE, provide equity and suitable location for placement of eCARE centre, offer rural telephony and other approved services at reasonable rates, as well as cover all operating expenses and amortisation. The entrepreneurs can apply for a loan that covers 90 per cent of the cost of setting up the eCARE centre which is a modified shipping container equipped with fixed cellular terminal phones, a computer and printer, and a solar panel system.

The project is helping small entrepreneurs establish rural business centres (RBCs) that sell voice telephony, internet connectivity and clean energy products and services to rural and peri-urban customers. Deployment of the RBCs is being done through a franchising mechanism managed by Ghana Telecom, the main telecommunications service provider in Ghana. Each RBC is equipped with a basic business package comprising 3 telephones, a computer, printer, internet services and solar photovoltaic (PV) system for power. Entrepreneurs are selected from rural areas, trained and provided with loans to acquire and operate their own RBCs.

The common theme in all these projects is the establishment of a Universal Access Fund by the respective governments. They also aim to reduce the gap between urban and rural access to ICT services by empowering entrepreneurs, NGOs and CBOs to operate commercially sustainable business that other than disseminating ICT services, also improve the quality of life the entrepreneurs and members of the community.

Constraints and challengesBridging the digital divide between the urban and rural areas is as challenging and bridging the gap between communities. The number and types of options available in developing countries are limited, contributing to communication inequalities between the developed and developing countries. As a result, the role of governments is even bigger in developing countries, especially in assisting ICT diffusion in the rural areas. ICT diffusion in developing countries is highly linked with ICT investments in the areas and policies need to be changed with emphasis on increasing government loans and spending into ICT projects.

The key constraints and challenges in diffusing ICT into the rural space include:

Poor access to ICT infrastructure in rural areas which leads to high installation and maintenance costs.

Entrepreneurial capacity of the rural community – great acumen but needs plenty of training.

Management incapacity to execute complex business models and to manage scaling.

Lack of understanding of the needs of the rural society and the various value chains that would benefit from ICT by project sponsors.

Lack of on boarding lessons learnt from similar failed projects by project sponsors.

Lack of concrete partnerships with the private sector to support and sustain the diffusion initiatives.

ICT is an enabler to rural development but cannot be diffused successfully without a framework within which it enables the rural society to benefit from its application.

Critical success factors for sustainabilityThe categories of sustainability relevant to an ICT project rely on factors that are critical for the development of ICTs in a rural community. A range of previous project case studies from development organisation literature reveal the lessons learned and good practice for the success or sustainability of rural ICT projects. An analysis of these related lessons disclose critical success factors (CSFs) that need to be applied to support the effectiveness of the rural ICT project process.

The importance of some CSFs depends on the objectives of the particular project. Nevertheless, most of these factors, to an extent, play a significant role in promoting sustainability across a variety of projects. The CSFs of rural ICT project sustainability are summarised below:

Simple and clear project objectives: Clear and simple project objectives sensitive to the community’s needs and limitations need to be determined for specific phases of implementation, hence setting out a solid realistic plan of small achievable steps and project deliverables that can be clearly communicated and accountable to stakeholders

Approaching the project in a holistic way: The project should not focus unduly on its immediate and narrow concerns, but keep in mind the specific needs of the rural community at large, in relation to the capability and sustainability of the technology for an enduring impact. Most of the CSFs of sustainability are based on applying this holistic approach.

Using ICT to enhance existing rural development activities: ICT projects need to be anchored to local organisational and existing rural development activities so as to be part of wider development plans and processes, hence providing a more immediate and identifiable development benefit.

Cultivating an influential project champion: ICT champions essentially inspire, drive, create awareness, and encourage the targeted community to use ICT, thereby facilitating the introduction of ICTs as smoothly as possible. This champion can be in form of a project partner such as a financial institution, a government ministry, a telecommunications company etc.

Incorporating socially excluded groups: ICT projects should incorporate social cultural factors (for example, gender awareness) into policy formulation, planning, implementation and the evaluation of projects for effective participation of social groups.

Participation of community target groups in the project process: Participation aims to create the conditions in a project required to speed up and make appropriate the purpose of ICTs in the rural context, based on the expectations of the community. Aspects include selecting target groups to participate, introducing the goals and benefits of the project, identifying the limitations and risks in the

community, performing a needs assessment and local content development, and providing continuous communication and feedback.

Focusing on local/demand driven needs: ICTs need to focus on being demand driven and not supply driven, in accordance with the assessed needs for information and services.

Building on local information and knowledge systems: Taking into consideration the local context associated with sharing knowledge created from social interactions between people ensures that information can be substantially understood, adopted and integrated into the daily lives of rural people.

Appropriate training and capacity building: Appropriate training that is sensitive to the community ICT skill gaps should be practiced. Training should importantly consist of content development, technical support, and business and development activity support. A train to train approach needs to be applied for widespread community training.

Facilitating local content development: The community needs to engage in local content development that is sensitive to the rural livelihood environment, so as to become producers of locally relevant, understandable, meaningful and applicable information and knowledge.

Motivation and incentive for ICT job placement in the community: Local ICT project training and capacity building should ensure that the skills acquired respond to the job market need, assist trainees with job placements in the telecentre, and equip them with proactive skills for finding jobs.

Focus on economic self-sustainability – Entrepreneurship: Entrepreneurship and creativity (economic sustainability) need to be fostered in rural areas, as the economic environment in which they operate eventually determines the extent and frequency of ICT use in the long term.

Encouraged local ownership: Ownership plays a significant role in setting the foundation for local buy-in and is crucial for relevance, effectiveness, efficiency and impact. It translates into a willingness to invest effort and resources in the ICT project.

Building local partnerships: The essence of partnership is that different actors have special competencies and capacities based on

their particular mandates that can contribute to rural ICT project sustainability in the form of finance and/or non-financial support (promoting services, raising awareness, and technological infrastructure).

Choosing appropriate technology: Mechanisms aimed at selecting the right technology for rural environments need to be incorporated. For instance, an infrastructure audit should be undertaken to determine existing and required infrastructure, etc.

Building on existing public facilities: Ideally, a community should support the project through providing a building that is rent and maintenance free. Preferred requirements of a building to house the ICTs include electricity, a telephone connection (if no wireless technology), security, and an appropriate location (visible and accessible).

On-going monitoring and evaluation of the project: Continuous monitoring and evaluation keep the project on track and reveal the impact on the rural community. Evaluation aims to enable stakeholders to understand the change that has occurred in the community as a result of the project, identify and understand mistakes and shortcomings of the project, improve on past experience, and influence project policy formulation.

Key Findings and Insights

Record keeping

There is a significant gap in record keeping in majority of the Pashas visited. Most of the records sighted by the M&E staff were very rudimentary and would barely pass for financial records. It was evident in majority of the cases that the Pasha owner/manager did not have any knowledge of financial management. This is despite the M&E team on various occasions availing a comprehensive template to be used in completing financial information for the benefit of the Pasha owner/manager, the Bank and KICTB. In one particular instance, the Pasha owner/manager had no idea that his business was breaking even until the M&E staff assisted him to complete the template.

Financial information is crucial in assisting KICTB and the Bank in assessing the performance of the Pashas and the DVRF. It also provides the Pasha owner/manager with a snapshot of how the business is performing.

It is therefore necessary to reinforce the need to maintain appropriate records at each Pasha via vocational and individual training. There is cause to make it mandatory for each Pasha Centre to maintain financial records in a standard format that will enable easy collation and analysis of the information. This can be escalated to provide a financial management application such as Money ManagerTM, and hosted on a portal where Pasha owners/managers can upload their financial information.

Empowerment and training

The general finding in all Pashas, with the exception of 2 is that many Pasha Centre’s are run and manager on an ad hoc basis signifying a lack of business management skills. Regular capacity building and technical support was pledged by KICTB to the Pashas for the first year of operations, but this was not effected. This training and technical support was meant to empower the Pasha owners/managers to run successful and sustainable enterprises. As such, some Pashas have spent a significant amount of money to access technical support as and when required. In one instance, the Pasha Centre had 9 of its 13 computers not functioning and as a result has decided to close down.

As such, it is imperative to develop a regular and structured training program targeted at all Pasha owners/managers. This training program should cover

areas such as financial management for non-finance managers, marketing, entrepreneurship, business planning and other business management skills. All this training is can be developed and delivered via e-learning and can be offered to the Pasha owners/managers, who may also be allowed to offer their customers the same training with certification from the approved institutions and content developers.

Lack of ownership

As a result of challenges in setting up the enterprise and stiff competition, many Pasha owners/managers seem to have neglected one of the key goals of the DVP i.e. diffusion of ICT services to the rural areas to bridge the digital divide. The Pasha owners/managers spend so much time ensuring that the business stays afloat that they have very little time to create awareness of their products and services. Also as a result of lack of clear branding of the Pashas, and requirements for many of the service providers such as financial institutions and telecommunication companies to have display their brand on the façade of the Pasha, it is difficult to entirely concentrate on the core business of the Pasha Centres.

Rather than offer a bouquet of services as provided in the procurement guidelines, some Pasha Centres have decided to concentrate on only one of the highest revenue generators and forsake the other services.

It is necessary to reinforce the goals and objectives of the Pasha owners/managers and remind them of their obligation and role in assisting KICTB and the GOK in bridging the digital divide by offering a bouquet of services rather than specializing on one.

Start-ups vs. existing businesses

An analysis of the Pasha Centres based on their time in operations revealed that those that were existing enterprises prior to accessing the DVRF loan are performing better than those that are start-ups. During this evaluation cycle, only 4 were existing businesses and they all were capable of comfortably servicing their loans. Majority of start-ups were struggling to generate enough revenues to pay for operating costs.

Existing business are able to utilize their existing channels to sell the Pasha bouquet of service and already benefit from an existing customer base. This provides them with the all-important customer goodwill necessary for this

kind of enterprise and therefore do not require to do a significant amount of marketing and awareness building. Start-ups have to develop channels they will use to sell their products, which consumes most of the working capital remaining after purchase of equipment.

Interventions in this case would be provision of incubation services for the start-ups, extending the loan repayment grace periods, developing a mentorship program or developing public-private partnerships to offer a bespoke service as suggested elsewhere in this report.

Branding and creating awareness

Branding and creating awareness has been an ever present recommendation in our M&E reports throughout the life of the DVP. Regrettably, this recommendation has not been implemented to date. Branding provides much needed visibility for the Pasha Centre’s. As indicated above, where a Pasha Centre is offering mobile money and agency banking services, it is difficult to recognize the Pasha Centre as a such because the owner/manager is require to display some form of branding to market the financial institution and the telecommunication companies.

A conspicuous Pasha brand needs to be developed and rolled out with immediate effect in order to create visibility and reduce the burden of the Pasha owners/managers in explaining what their business do. A marketing campaign also needs to be instituted to create awareness of the presence and function of Pasha Centre’s as GOK and KICTB partners in bridging the digital divide.

Appendix-1

Round One    

Applicant Constituency Town

Oscar Gwehona Gidei/Reuben Kipchirchir Sirma

Baringo Central Karbarnet

Eric Chirchir / Wilbert Cheruiyot Bomet Bomet

Zacheaus Adukeyi Kubasu Butula Butula

Edwin Odembo Funyula Funyula

Charles Gicira Warukira Manyatta Embu

Elijah Kitati Mwaniki Ijara Masalani town

Robert Okoth Okwany/Frank Otieno Owiti Rangwe Homa bay

Nzambu Nasson Mwathe/Immaculate Nthambi Mutuku

Kajiado Kitengela township

Qassim Mukoya Kupuoni Matungu Bulimbo

Nelson Kiprono Siongok Belgut Sosoit

Paul Karanja Kamami Gatundu North Gatukuyu

Geoffrey Gitau Kamau/Veronica Muringi Gitau

Juja Ruiru

Lucy Wanjiku Kinyanjui Kabete Kikuyu township

Jeremiah Wando Mbugua/Geoffrey Thuo Gaitheru

Limuru Limuru

Paul Onyango Owino Kaloleni Kaloleni

Walad Ahmed Walad/Salma Said Mohamed Malindi Timboni

Kipkorir Aly Azad Rana/Mohammed Halim Rana

Kisumu Town West Kisumu

Francis Okoth Asunah/Elisha Jack Oraro/Betty Atieno Asunah

Nyando Awasi Shopping Centre

Millicent Achieng Agoro Otieno Nyakach Pap-Onditi

Peter Gichohi Gitau Laikipia West Subuku

Philip Kimeu Mulovi/John Musau Kimeu Mbooni Mbumbuni

Alice Bosibori Onsarigo/Jude Chrispo Kikuyu/John Kieti Makila

Makueni Wote town

Abel Koome Gitura Central Imenti Meru town

Alex Mwiti Kungutia/Enos Opati Ongute/Lawrence Wambugu Kemoche

Igembe South Maua (or Meru)

Kinoti Marete George Nithi Chogoria

Douglas Kabii Munyua North Imenti Makutano

Jared Odoyo Kwaga/Christine Akinyi Ochola Migori Migori

Eric Wesonga Simiyu Likoni Mombasa town

Samuel Karanja Ngugi Kigumo Kangari

Philip Muguro Ngugi Maragua Maragua

Bernard Muriuki Mucheke/Jane Wanja Ndwiga

Makadara Mbotela Shopping Centre

David Kipkemboi Tuikong Emgwen Kapsabet

Joseph Kirite Kinangop Engineer

Pharis Migwi Baaru Ol Kalou Milangine

Symphrose Ouma Alego Ndere Shopping Centre

Cuthbert Mcharo Idawo Wundanyi Wundanyi

Ayub Samba Vihiga Majengo

Round Two    

Applicant Constituency Town

Cleophas Opondo Okeyo Naivasha Gilgil

Jeremiah Mugambi Ananga Ntonyiri Laree Town

Anthony Kamau Kamunyu Molo Molo

Erick Otieno Okoth Rongo Rongo Town

Paul Muriithi Kabao Dagoretti Kawangware

Joseph Kinyua Kariuki & Martin Kinyua Wachira

Kerugoya/Kutus Kerugoya

Peter Ng’ang’a Waweru Lari Uplands

Joseph Ngotho Chiira Mathioya Kiriaini

Telewa Edward Kukhubilo Kimilili Kimilili

Daniel Wakaba Macharia Starehe Nairobi

Silvester Lisanza Miheso Lurambi Maramba

Edwin Muriithi Njiru Runyenjes Runyenjes

Francis Gitahi Muhiu Ndaragwa Ndaragwa

Grace Naisenya Olochoki Narok North Narok

David Kiprono Aruasa Narok South Ololulunga

Patrick Amudavi Alulu Kisumu Town East Kisumu

Jeremiah Osallah Osallah Kasipul Kabondo Oyugis

Lilian Wanjiku Ndirangu Kamukunji Nairobi

Collins Wilson Ochieng Nakuru Town Nakuru

Shadrack Kioko Kitolo Machakos Town Machakos

Rebeccah Wambui Kariuki Laikipia East Nanyuki

Eutychus Githinji Kareithi Gatanga Kirwara

Edwin Mwathe Ndungu Subukia Nakuru

Mike Tophut Opiyo Langata Langata

Josina Nasimiyu Tawai Malava Kakunga

Evans Nyakundi Nyangau Kitutu Chache Marani